Palau Company is considering the introduction of a new product. As one step its study of the new product, the company has gathered the following data: Number of units to be produced and sold each year Unit manufacturing cost Projected annual administrative and selling expenses Estimated investment required by the company Desired ROI 12,500 600,000 5,000,000 18% The company uses the absorption approach to cost-plus pricing. Required: 1. Compute the markup the company will have to use to achieve the desired ROI. 2. Compute the target selling price per unit.
Palau Company is considering the introduction of a new product. As one step its study of the new product, the company has gathered the following data: Number of units to be produced and sold each year Unit manufacturing cost Projected annual administrative and selling expenses Estimated investment required by the company Desired ROI 12,500 600,000 5,000,000 18% The company uses the absorption approach to cost-plus pricing. Required: 1. Compute the markup the company will have to use to achieve the desired ROI. 2. Compute the target selling price per unit.
Managerial Accounting: The Cornerstone of Business Decision-Making
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Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
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Chapter11: Performance Evaluation And Decentralization
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Problem 47P: (Appendix 11A) Cycle Time, Velocity, Conversion Cost The theoretical cycle time for a product is 30...
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The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:Exercise II-Set B
Palau Company is considering the introduction of a new product. As one
Number of units to be produced and sold each
step in its study of the new product, the company has gathered the following data:
year
12,500
Unit manufacturing cost
Projected annual administrative and selling expenses
Estimated investment required by the company
P.
600,000
5,000,000
18%
The company uses the absorption approach to cast-plus pricing.
Desired ROI
Required: 1. Compute the markup the company will have to use to achieve the
desired ROI.
2. Compute the target selling price per unit.
412
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